Deck 14: The Demand and Supply of Resources

Question 1

Which of the following is NOT a factor of production?

A) land
B) output
C) inputs
D) entrepreneurship
E) capital

Answer 1

output

Question 2

Derived demand best describes the demand for which of the following options?

A) cupcakes
B) canned soda
C) computer chips
D) cat food
E) cars

Answer 2

computer chips

Question 3

The fact that workers must share a limited amount of space and equipment results in ________ marginal productivity.

A) increasing
B) constant
C) fluctuating
D) unpredictable
E) diminishing

Answer 3

diminishing

Question 4

Refer to the following graphs to answer the following questions:
Choose the graph that represents the following situation: The government raises the minimum wage.

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 5

Refer to the following graphs to answer the following questions:
Choose the graph that represents the following situation: Consumer demand for Princeton Pickles increases as customers find out that pickles are highly nutritious.

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 6

The marginal product of labor is the

A) additional amount of consumer goods that can be bought from an additional hour's worth of work.
B) additional amount of inputs a firm demands based on a change in consumer demand for the output.
C) additional amount of output that can be produced from hiring one more worker.
D) decreasing amount of output that can be produced from hiring one more worker.
E) value of production from the last worker hired.

Question 7

Derived demand is

A) consumer demand for goods and services.
B) based on the prices of factors of production.
C) the demand for factors of production directly by business.
D) the demand for factors of production dependent on consumer demand for output.
E) calculated for firms.

Question 8

Use the following graph, which depicts Mighty Max’s labor demand for his duffel bag business, to answer the following questions. The labor demand curve shown is calculated based on a duffel bag price of $10.
If the price increases from $10 to $20 per bag,what happens to the labor demand curve?

A) It shifts to the left.
B) It shifts to the right.
C) It remains unchanged.
D) The firm moves upward along the labor demand curve.
E) The firm moves downward along the labor demand curve.

Question 9

The area underneath a firm's labor demand curve and above the market wage is the graphical representation of the firm's

A) revenues.
B) costs.
C) profits.
D) losses.
E) hiring decisions.

Question 10

If workers become more productive in a given occupation,they will likely see their employment ________.

A) fall
B) double
C) rise
D) stay the same
E) go into overtime

Question 11

Bobby knows that she is producing a value just equal to her wage.If the price of what she makes falls,Bobby knows that she

A) will be able to keep her job.
B) is likely to work overtime.
C) will work less.
D) is likely to be fired.
E) will not be able to find work anywhere.

Question 12

The use of farm machinery to plant and harvest crops has increased because it is more productive than the typical farmhand.Demand for farmhands has

A) remained steady.
B) shifted to other areas of the farm.
C) decreased.
D) fallen to zero.
E) increased.

Question 13

Derived demand is NOT represented by the demand for

A) bakers.
B) home ovens.
C) fast-food fryers.
D) office space.
E) car engines.

Question 14

Refer to the following graphs to answer the following questions:
Choose the graph that represents the following situation: A documentary on bottled water demonstrates the high impact this product has on the environment.In response,consumers drastically reduce their consumption of this product.

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 15

If the price of pencils falls,the marginal product of labor will ________ and the value of the marginal product of labor will ________.

A) fall; fall
B) remain unchanged; increase
C) rise; rise
D) remain unchanged; decrease
E) remain unchanged; remain unchanged

Question 16

Use the following graph, which depicts Mighty Max’s labor demand for his duffel bag business, to answer the following questions. The labor demand curve shown is calculated based on a duffel bag price of $10.
If the wage of the fifth worker is $20 and his or her value of the marginal product of labor is $25,the firm

A) benefits by stopping at this level of labor.
B) is likely to fire the fifth worker.
C) asks this fifth worker to work overtime.
D) is likely to benefit by hiring more workers.
E) is likely to lose profit by hiring more workers.

Question 17

Factors of production are

A) goods and services.
B) used to make goods and services.
C) purchased by the consumer for personal use.
D) sold by the consumer for income.
E) the property of firms.

Question 18

As computer usage in companies and in the home has increased,the labor demand for information technology (IT)workers has

A) remained steady.
B) decreased.
C) fallen to zero.
D) infinitely increased.
E) increased.

Question 19

Talia just applied for a position with Rory's firm.Rory knows that Talia will earn $20 an hour and can produce a value of the marginal product of labor (VMPL)of $40.Rory will ________ Talia because her VMPL is ________.

A) hire; positive
B) not hire; positive
C) hire; negative
D) not hire; negative
E) possibly hire; positive

Question 20

Refer to the following graphs to answer the following questions:
Choose the graph that represents the following situation: Out of fear of losing their jobs in a depressed economic climate,workers increase their rate of production.

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 21

When Noah's wage rises and he decides to work more hours,we know that the ________ effect has dominated the ________ effect.

A) substitution; income
B) labor; leisure
C) income; substitution
D) leisure; labor
E) substitution; leisure

Question 22

Refer to the following graphs to answer the following questions:
Which graph shows the income effect dominating the substitution effect of higher wages?

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 23

Refer to the following graphs to answer the following questions:
Choose the graph that reflects this scenario: Roman decides that he values income much more strongly because he uses the money to buy goods he can enjoy more than free time.

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 24

Yolanda owns a temp agency.She sees demand for her workers increase because firms prefer a more contingent workforce.The value of the marginal product of labor of her temps

A) stays the same.
B) increases because the temps produce more per hour.
C) decreases because the temps know they are going to get jobs.
D) increases because the price of their services is higher.
E) falls because job uncertainty lowers productivity.

Question 25

The income effect describes the

A) incentive to change jobs.
B) decision whether to join the labor force.
C) decision to ask for a raise.
D) incentive to work more when the wage rises.
E) incentive to work less when the wage rises.

Question 26

If more of the production process for automobiles were switched over to machines,the demand for auto factory assembly line workers would ________ machine maintenance.

A) decline but increase
B) decline and also decline
C) increase but decline
D) increase and also increase
E) remained unchanged but increase

Question 27

Rowan is deciding whether to pick up more hours at work or to take a vacation.This decision best describes

A) her hours decision.
B) her labor force participation decision.
C) the value she places on income.
D) the labor-leisure trade-off.
E) the necessity of income.

Question 28

The substitution effect describes the

A) incentive to work more when the wage rises.
B) incentive to work less when the wage rises.
C) decision whether to work more or less.
D) decision whether to join the labor force.
E) incentive to change jobs.

Question 29

Labor supply is the relationship between

A) wages and willingness to hire workers.
B) price of output and amount of output for sale.
C) price of capital and amount of capital for sale.
D) wages and willingness to work.
E) wages and amount of output for sale.

Question 30

When the opportunity cost of leisure is high,people tend to work ________ hours.When it is low,people tend to work ________ hours.

A) the same; fewer
B) more; fewer
C) fewer; more
D) more; the same
E) fewer; the same

Question 31

The fundamental decision faced by workers is called

A) labor demand.
B) labor supply.
C) income effect.
D) the labor-leisure trade-off.
E) the substitution effect.

Question 32

The backward-bending labor supply curve occurs because workers value leisure

A) and income differently as wages change.
B) consistently more than they do income at all wages.
C) consistently less than they do income at all wages.
D) and income by the same amount at all wages.
E) and income by fluctuating,unpredictable amounts at any wage.

Question 33

When Franklin earns more income but still works less,leisure is a ________ good for him.

A) substitute
B) complement
C) luxury
D) necessity
E) normal

Question 34

If you know that the substitution effect dominates the income effect when Jasper's wage rises,you can tell that his labor supply curve is

A) upward-sloping.
B) downward-sloping.
C) vertical.
D) upward-sloping at an increasing rate.
E) downward-sloping at an increasing rate.

Question 35

Refer to the following graphs to answer the following questions:
Which graph shows the substitution effect dominating the income effect of higher wages?

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 36

Refer to the following graphs to answer the following questions:
Which graph shows a person who has a fixed quantity of hours that he or she is willing to work per week?

A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Question 37

No matter how high his wage rises,Johann will always work more.His labor supply curve is

A) downward-sloping.
B) horizontal.
C) vertical.
D) upward-sloping.
E) upward-sloping at an increasing rate.

Question 38

When their wages rise,Raymond works more and Brandi works less.We can infer that Raymond values income ________ than Brandi.

A) less
B) the same
C) more
D) half as much
E) a third more

Question 39

The backward-bending labor supply curve has its shape because,at

A) low wages,the income effect dominates the substitution effect,but the reverse occurs at high wages.
B) high wages,the substitution effect dominates the income effect,but the reverse occurs at low wages.
C) low wages,the substitution effect dominates the income effect,but the reverse occurs at high wages.
D) all wages,the income effect dominates the substitution effect.
E) all wages,the substitution effect dominates the income effect.

Question 40

When people make more money,they sometimes take more vacation time.Based on this information,we can say that leisure is a(n)________ good.

A) substitute
B) complement
C) inferior
D) Giffen
E) normal

Question 41

Migration is when

A) foreign persons enter a country.
B) foreign persons leave a country.
C) citizens move to another country.
D) citizens move within their own country.
E) foreign persons move within their own country.

Question 42

The following graph represents Zendar’s labor market. Use this graph to answer the following questions:
What is the equilibrium number of workers in Zendar?

A) 20
B) 25
C) 30
D) 35
E) 40

Question 43

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

There will be a surplus of ________ workers at a wage of ________.

A) 75; $10
B) 100; $20
C) 135; $40
D) 40; $40
E) 50; $30

Question 44

More job opportunities open up in the South,prompting labor supply curves in northern states to ________ and in southern states to ________.

A) remain unchanged; shift right
B) shift right; shift right
C) shift left; shift right
D) shift left; remain unchanged
E) shift left; shift left

Question 45

There will be a ________ of workers when the wage is ________ the equilibrium wage.

A) surplus; at
B) surplus; below
C) surplus; above
D) shortage; above
E) shortage; at

Question 46

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

The supply schedule indicates that the labor supply curve is

A) backward-bending.
B) upward-sloping.
C) downward-sloping.
D) vertical.
E) horizontal.

Question 47

There will be a ________ of workers when the wage is ________ the equilibrium wage.

A) surplus; at
B) shortage; below
C) shortage; above
D) shortage; at
E) surplus; below

Question 48

The minimum wage is increased to $15.This higher wage might ________ labor force participation,shifting the labor supply curve to the ________.

A) decrease; right
B) increase; left
C) decrease; left
D) increase; right
E) not change; right

Question 49

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

If the wage is set temporarily at $15,it will need to ________ to restore equilibrium.

A) decrease to zero
B) increase to $35
C) fall
D) increase
E) remain unchanged

Question 50

The government lowers the retirement age to 55.We would expect to see the labor supply curve

A) stay the same.
B) shift left.
C) stay the same but move upward.
D) stay the same but move downward.
E) shift right.

Question 51

Ummal travels back in time to deposit $100 in a high-interest-bearing savings account.When she returns to the present,she is a billionaire.We can expect Ummal to work ________ hours because of the ________ effect.

A) more; substitution
B) more; income
C) fewer; substitution
D) more; labor-leisure
E) fewer; income

Question 52

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

If the wage is temporarily set at $25,it will need to ________ to restore equilibrium.

A) rise
B) fall
C) remain unchanged
D) decrease to zero
E) increase to $30

Question 53

After World War II,social norms relating to women's participation in the labor force relaxed and women were more likely to be employed outside the home.We would expect to see the labor supply curve

A) stay the same.
B) shift left.
C) stay the same but move upward.
D) stay the same but move downward.
E) shift right.

Question 54

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

Wages above ________ will cause a ________.

A) $10; surplus
B) $50; shortage
C) $20; surplus
D) $30; shortage
E) $40; shortage

Question 55

The citizens of Robbinsville notice that their friends and family in the neighboring city of Deville are earning higher wages.We would expect the labor supply in Robbinsville ________ and the labor supply in Deville to ________.

A) shift right; shift right
B) shift left; shift left
C) remain unchanged; shift right
D) shift left; shift right
E) shift right; shift left

Question 56

Immigration is when

A) foreign persons enter another country.
B) foreign persons leave another country.
C) citizens move to another country.
D) citizens move within their own country.
E) foreign persons move within their own country.

Question 57

The following graph represents Zendar’s labor market. Use this graph to answer the following questions:
At a wage of ________,there is a ________ of ________ workers.

A) $10; surplus; 30
B) $40; shortage; 30
C) $10; shortage; 30
D) $35; shortage; 20
E) $25; surplus; 10

Question 58

The following graph represents Zendar’s labor market. Use this graph to answer the following questions:
To have no surplus or shortage of workers in Zendar,what does the wage rate have to be?

A) $5
B) $10
C) $15
D) $20
E) $25

Question 59

Use the following table,which shows the supply and demand schedules for workers in the country of Hovian,to answer the following questions:

The equilibrium wage is

A) $10.
B) $20.
C) $30.
D) $40.
E) $50.

Question 60

The labor market is said to be in equilibrium when

A) everyone who wants to work is supplying his or her labor.
B) the number of workers is equal to the number of jobs available at a specific wage.
C) firms are unwilling to hire more workers.
D) workers keep their hours constant.
E) the number of available workers is increasing.

Question 61

What is the best economic explanation for the high pay earned by National Hockey League stars?

A) There are many highly skilled players.
B) They have superior bargaining skills in contract negotiations.
C) Talent allows for higher pay.
D) Fans want to see really good players,and team owners are willing to pay more for good players.
E) The league is promoting these players.

Question 62

Companies outsource their operations because

A) the weather is nicer in other countries.
B) employees in other countries take less sick leave.
C) governments in other countries allow them to operate.
D) labor costs are lower.
E) no one wants to do the work domestically.

Question 63

Which position is most easily outsourced?

A) a customer service representative at your local cable company
B) a hair stylist
C) a local town chocolatier
D) a general practitioner doctor
E) an economics professor

Question 64

Lorelei finds that she is consistently unable to fill all of the open positions at her bakery.This indicates that the wage she is offering is

A) above the market rate.
B) at the market rate.
C) double what her competitors are offering their employees.
D) half of what her competitors are offering their employees.
E) below the market rate.

Question 65

The following graph represents Zendar’s labor market. Use this graph to answer the following questions:
At all wages below ________,there will be ________.

A) $10; a surplus
B) $25; a shortage
C) $40; a surplus
D) $35; no labor supplied
E) $20; no labor demanded

Question 66

Which of the following situations describes a monopsony?

A) Nicolette is an ice cream artist and several shops are hiring.
B) Francine is the only teleport technician in the world.
C) Fernando is an accountant in New York City.
D) Leslie is a college instructor and there is only one university within 300 miles of her permanent residence.
E) Leo is the only professional dog groomer in town.

Question 67

A situation with only one buyer of labor is called a(n)

A) monopoly.
B) oligopoly.
C) monopsony.
D) labor market equilibrium.
E) labor market disequilibrium.

Question 68

A company that produces simple textiles outsources its operations to Indonesia.Wages for Indonesian workers will ________ and their employment will ________.

A) rise; rise
B) fall; rise
C) stay the same; fall
D) fall; stay the same
E) fall; fall

Question 69

In the short run,wages in the home country will ________ when a company outsources its operations because labor demand in the home country has ________.

A) rise; risen
B) stay the same; fallen
C) double; risen
D) fall by a third; risen
E) fall; fallen

Question 70

In theory,some people might lose in the short run from outsourcing,but in the long run,all should benefit.Which option demonstrates that this theory might NOT be true?

A) Lower labor costs lead to lower prices,so more foreigners can buy imports.
B) Income earned at outsourced jobs allows foreign workers to purchase imports.
C) Lower prices allow more consumers to buy the good domestically.
D) Outsourcing stimulates competition.
E) Inadequate transition programs hinder the ability of domestic workers,who lost their jobs to outsourcing,to obtain new jobs.

Question 71

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D =80 - 2W.The equilibrium wage in this labor market is

A) $10.
B) $12.
C) $36.
D) $56.
E) $80.

Question 72

In the distant future,companies will be using technology that can replicate food.What will happen to the equilibrium wage and quantity of cooks?

A) The wage will rise and the number of cooks employed will rise.
B) Both will remain unchanged.
C) The wage will stay the same,but many cooks will leave the market.
D) The wage will rise,and the number of cooks employed will fall.
E) The wage and quantity demand will both decrease because firms won't hire as many cooks.

Question 73

With a large group of citizens leaving a country,what will happen to the equilibrium wage and quantity of workers employed?

A) Both will fall.
B) Both will rise.
C) The equilibrium number of workers will rise and the wage will fall.
D) The equilibrium number of workers will fall and the wage will fall.
E) The equilibrium number of workers will fall and the wage will rise.

Question 74

Tamar's sister complains that Tamar gets paid considerably more as a caterer than she is paid as a chef,even though the careers are similar.What might explain this situation?

A) People rarely hire caterers for their events and so are willing to pay a premium for the service.
B) There are many chefs in town,but few caterers.
C) The training required to be a chef is so advanced that people cannot afford her services.
D) There are many substitutes for a chef.
E) Tamar's catering business can go to a person's residence,and her sister's position does not allow such mobility.

Question 75

Kaitlin has recently been trained as a highly specialized medical physician.There is only one hospital that needs her services.Kaitlin can expect her wages to be ________ compared to what her wages would be in a situation of perfect competition.

A) higher
B) double
C) half
D) the same
E) lower

Question 76

Mauna decides that worker turnover is too high at her firm.She hopes that by paying above-market wages,workers will stay longer.This may create

A) a surplus of workers.
B) a surplus of jobs.
C) a shortage of workers.
D) a shortage of overtime.
E) no disequilibrium.

Question 77

The following graph represents Zendar’s labor market. Use this graph to answer the following questions:
At a wage of ________,________ workers are demanded.

A) $5; 10
B) $10; 35
C) $15; 40
D) $40; 10
E) $45; 45

Question 78

Which company is most easily able to outsource its operations and have its good or service produced in another country?

A) Hannah's Hair Salons
B) Darling Dentistry
C) Queen's Quilts
D) Busker Baseball Team
E) Penelope's Fresh Pretzels

Question 79

Outsourcing is when

A) consumers buy products made in another country.
B) foreign consumers buy products made in the United States.
C) U.S.firms shift jobs to outside the company.
D) the costs of operating are higher in another country.
E) the domestic labor supply shrinks.

Question 80

Companies begin to find that customers,when calling customer service,want to talk to real people rather than to a recording.The demand for receptionists will ________ and the market equilibrium wage will ________.

A) fall; fall
B) increase; fall
C) stay the same; rise
D) decrease; rise
E) increase; increase